Consumers in Saudi Arabia feel the region’s economic pressures may be lifting, with an upward shift recorded in consumer confidence for the first time this year. The latest Consumer Confidence Index (CCI), a quarterly survey conducted by the Middle East’s number one job site - Bayt.com in conjunction with research specialists YouGov, showed that KSA had moved up the index by6.4 index points.
While respondents remain largely pessimistic about their current financial position, the country’s economy and whether or not it’s a good time to buy goods, optimism reigns for the future, with44% believing business conditions - and37% believing their country’s economy - will be better in a year’s time.
On the whole, consumer confidence improved across all of the surveyed countries with the exception of Algeria. The UAE recorded the largest improvement, moving up by15.9, while Kuwait registered an improvement of14.2 points and Qatar of3.9 points.
Around the Levant, Syria and Lebanon both reported improvements of8.0 and3.3 points respectively - following Lebanon’s record of continually improving consumer confidence. Despite being the only country in the last wave of the survey (February/ March) to show an improvement on its index, in this wave, Algeria was the only country to move down - by2.3 index points.
The Consumer Confidence Index (CCI) is a measure of consumer expectations and satisfaction of various elements of the economy including inflation, job opportunities and the cost of living.
“Recent news reports have reported relative stability- if not improvements- in some sectors of both the local and global economy. News of this stability - and presumably improvements on a grass roots level in most countries in the Middle East, are starting to impact professionals, which therefore accounts for the improvement we are seeing in the CCI,” explained Amer Zureikat, Bayt.com’s Regional Manager.
The CCI asks the respondents about their personal financial situation, and whether - since12 months ago - they feel that they are better, or worse off. Almost one third of KSA’s respondents,28%, felt they were better off now than last year, while33% stated their situation was the same and32% felt it was worse. Across the region, the figures stayed in line with the previous wave - once again a quarter of respondents felt they were better off;34% felt they were worse off, and33% felt no change in their financial position.
Qatar and Bahrain (27% each) also recorded significant improvements in the region vis-a-vis personal financial position - with respondents stating that they were better off. By contrast, Jordan’s respondents were most negatively hit in terms of their financial position, with44% of all respondents stating that their financial situation had gotten worse over the past year.
Another indicator for measuring consumer confidence is assessing consumer expectations and the level of optimism towards the future. Similarly to overall consumer confidence, all of the countries felt an improvement, with the exception of Algeria. KSA and Qatar both enjoyed sizable improvements vis-a-vis consumer expectations following from previous drops - moving up by7.9 and6.9 points respectively, contrasted to Algeria’s drop of2.2 points. Unlike the last wave, when Kuwait was the country hardest hit - dropping down the index by14.7 points, Kuwait marked a significant improvement - moving up the index by17.3 points. The UAE also moved up the index by a very positive17.7 points - the highest of all the surveyed countries.
However, the majority of respondents across the region feel it is not a good time to buy durable goods such as televisions, refrigerators or property, (43%), compared to20% who do feel it is a good time to buy such goods.
“The greater degree of optimism we are seeing amongst consumers is in line with reports around the globe that the ‘green shoots’ of recovery are being felt, however people remain cautious about their own spending and this trend may remain for the long-term,” said Nassim Ghrayeb, CEO, YouGov.
In terms of respondents’ optimism for the future, overall,44% believed that their financial position would be better in a year’s time; with just9% of respondents believing that it will be worse. In KSA, half of all respondents believe their personal finances will get better, compared to8% that believe they may get worse, and16% believing they will stay the same.
What’s more, over a third of the region’s respondents -37% - believed that their country’s economy would improve in a year’s time, compared to the23% who stated that it would worsen. Most positive about economic improvements in their country were those respondents in Kuwait with45% agreeing that things would get better in a year, closely followed by Saudi Arabia’s respondents at44%. Just18% believed things would get worse in KSA, and22% believe things will stay the same.
Feelings across the region varied when it came to the propensity to consume. Despite a previous improvement, Lebanon witnessed an index drop of4.7 points in the current wave, closely followed by Algeria and Qatar, which dropped3.9 points each. True to form in the current survey, the UAE moved up the index the highest - witnessing a jump of12.6 index points. With the exception of Qatar, the gulf showed positive improvements in its propensity to consume, with Kuwait and Saudi Arabia both moving up;7.9 and4.4 points respectively.
“Our quarterly Consumer Confidence Index provides us with very strong indications on the current feelings, concerns and attitudes that underlie the current market. What we aim to achieve through such research is to empower businesses, HR professionals and in fact any other stakeholders in business or industry - with thematic, up-to-the-minute and relevant insights into how those in the heart of the labour market are thinking; so they can then use these insights for either adapting their businesses or adopting new strategies for the future - in line with the needs of the market,” said Ghrayeb.
How people feel about the local job market and their attitudes towards availability of jobs and salary satisfaction is measured in the employee confidence index (ECI) – a significant contributor to the CCI. In the current wave, and in a complete reversal from the previous survey’s results, Lebanon this time around was the only country to show a drop (albeit marginal) in employee confidence - by0.2 points. In this index, Kuwait showed the biggest improvement of11.1 points, followed by the UAE which moved up8.1 index points and Saudi Arabia by2.7 points. Syria enjoyed an improvement of3.1 index points, and Egypt of3.0 points. The data suggests that there is universal optimism, with labour markets across the Middle East finally picking up.
“As a direct consequence of the global economic downturn, respondents feel that salary increases haven’t kept pace with the cost of living, with63% saying that increases are not in line. However, working professionals across the region have high hopes towards the future with an overwhelming44% firmly believing their financial positions will be better in a year’s time,” stated Zureikat.
The current wave registered a significant improvement in terms of whether or not respondents felt more jobs would be available in a year’s time. Previously,41% of respondents believed work availability would be worse, compared to just33% in the current wave. Most optimistic about the future availability of jobs at35% was Kuwait, closely followed by the UAE (34%) and KSA (33%).
“The doom and gloom of the last three quarters has gripped the region, but now, there are signs that the global recession and its effects on the region might finally be starting to ease. Conducting surveys such as the Consumer Confidence Index shows a number of telling indicators - including how people really feel about their current finances and how positive they feel about the coming year. Taking this kind of data and actually using it wisely to develop sustainable strategies for business success, may well define the difference between those companies that achieve lasting success, and those that will fail,” concluded Zureikat.